Favourable investment climate and healthcare reforms boost life sciences industry in Turkey

Big pharmaceutical companies and foreign investors are flocking to Turkey to capitalise on its encouraging economic policies, according to a new study from Frost & Sullivan.

The establishment of technology development zones that exempt pharmaceutical entrepreneurs and academics from taxes until 2023 has played a crucial role in driving R&D activity in the nation’s life sciences industry.

The report, 2014 Life Sciences Outlook in Turkey, finds that the industry earned revenue of US$14.5bn in 2013.

The pharmaceutical segment, valued at $14bn, is expected to rise to $21.65bn by 2018 at a compound annual growth rate (CAGR) of 9.1%.

Meanwhile, the clinical diagnostics segment, which accounted for the rest of the life sciences revenue, is forecasted to reach $0.70bn at a CAGR of 7.4%.

‘Biologics, oncology drugs and blood-based products are expected to support the development of the life sciences market in a big way,’ said Frost & Sullivan Healthcare Senior Research Analyst Aiswariya Chidambaram.

‘The biologics segment, which accounted for 11% of the total Turkish pharmaceutical market in 2012, is poised to expand at a CAGR of 15% between 2013 and 2018.’

Biologics, oncology drugs and blood-based products are expected to support the development of the life sciences market in a big way

On the other hand, the oncology segment will witness strategic investments – including certain tax allowances, customs duty exemption and value-added tax exemption – worth more than $9m, she added.

Turkey’s Healthcare Transformation Programme will remain instrumental in boosting spending across these segments and ensure that the country’s life sciences market progresses faster than the US, Japan and Europe, the report says.

But price ceilings that do not exceed 66% of drug reference prices and rigid reimbursement policies are having an adverse impact on foreign investors’ profits and overall market momentum.

The lengthy drug approval process and poor patent protection are also dampening investment in the Turkish life sciences industry.

‘With the reimbursement amount for prescription drugs having decreased at an average AGR of 7.1% between 2009 and 2012, companies are increasingly going into the over-the-counter segment with different product offerings,’ said Chidambaram. ‘This trend is expected to significantly boost domestic production and supply capacity.’

Turkey is expected eventually to become the regional life sciences capital of the Middle East and North Africa, predicts the report.